Africa's startup funding hit $3.8 billion in 2025, but pre-seed investment dropped to its lowest level since 2021

A report by the African Business Angel Network finds that early-stage deals between $100,000 and $500,000 fell sharply, raising questions about whether the continent's pipeline of new companies can sustain its growth

Fadilah Tchoumba, CEO of ABAN.

Africa's startup ecosystem raised approximately US$3.8 billion in 2025, growing faster year-on-year than Europe, Latin America or Southeast Asia, with eight deals closing above US$100 million. But the funding that determines whether an idea becomes a company in the first place is shrinking. Pre-seed investment across the continent totalled just US$46.5 million in 2025, spread across 281 deals, representing barely 1.5 per cent of total venture capital deployed.

Those figures come from the 2025 Angel Investment Report, published by the African Business Angel Network (ABAN) in collaboration with the United Nations Development Programme (UNDP) and the Ministry of Foreign Affairs of Japan. The report tracks trends in early-stage investment across the continent and highlights a gap that the headline funding numbers do not capture: deals between US$100,000 and US$500,000 dropped to their lowest level since 2021, with only 129 such investments made in the past twelve months.

For South African founders, the data points to a challenge that is already visible on the ground. The country's startup ecosystem, one of the most active on the continent, depends on a steady flow of pre-seed capital to move early ventures from concept to product. When that layer thins out, fewer companies reach the stage where they can compete for the larger rounds that the headline numbers reflect. The withdrawal of established pre-seed investors, combined with the repositioning of others toward later stages, has made the gap harder to fill through institutional channels alone.

That shift is pushing angel investors into a more central role. According to the report, angels deployed over US$4.4 million across the continent in 2025, and 65 per cent of angel-backed startups went on to secure follow-on funding. The investor base is also shaping what gets funded: 71 per cent of surveyed angels said they prioritise investments that drive job creation and economic growth, nearly two-thirds are backing women-led ventures, and 79 per cent invest in businesses led by young founders. The diaspora is a significant part of this picture, with 35 per cent of respondents investing from outside the continent while channelling expertise and networks back.

"The growing shift in the angel investment ecosystem on the continent reflects a structural shift in the investment landscape, where angel investment is increasingly playing a critical role in driving business growth, job creation, and economic resilience beyond traditional financial support. This evolution is evident in the 2025 performance data," said Fadilah Tchoumba, CEO of ABAN.